How the data infrastructure stack will change this year

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In 2022, the digital advertising industry will face a further devaluation of third-party identifiers. Brands, agencies, publishers and technology companies will start a melee to implement the infrastructure to support the connectivity of the agreed data. As the need for data connectivity accelerates, new technology stacks will emerge. This “Data Connectivity Infrastructure” stack will become a key investment segment and we can expect to see major integration (read: M&A and key partnerships) in 2022 as a result.

Components of the Data Connectivity Infrastructure Stack

There are currently three main types of infrastructure for data connectivity:

  • CDPs and DMPs – software for managing audience data
  • Data Clean Rooms and Data Sanctuaries – Software for securely porting data
  • Identity technology – tools that marry and enrich people’s data on silos and partners so that the data used is complete and accurate.

In 2021, we first began to see these solutions packaged together, which makes sense because they are all part of the same “data connectivity” value chain. We are already seeing a merger or at least a partnership trend. LiveRamp already offers three solutions: identity, safe haven (clean room) and data marketplace (DMP / CDP). It’s not the perfect Trifecta by any means, but the three-in-one packaging makes it highly competitive with Point Solutions and bound to trigger consolidation from other infrastructure competitors. Meanwhile Clean Room Infosom has launched Infosom Bridge to link with identity providers.

In 2022, big players like Adobe, Oracle and Salesforce will start stacking decks in their favor by lifting companies to support their ability to power end-to-end data connectivity for first-party data. Ultimately, this partnership will lead to M&A. The timeline is contingent when Google and Apple finally pull the plug on accelerating the need for first-party cookies, change is already taking place and is set to be completed by 2022.

M&A can direct changes to the stack

For marketers, this means that the Point Solution data connectivity products they are using today (currently offered by various providers) could be the exclusive product feature of tomorrow. Marketers will need to decide whether to stick with multiple partners or integrate. Some brands will continue to work with multiple point solutions as they seek to create their own customized stack, and consolidation will remove some of that flexibility. Other brands ultimately want the perfect suite, but want to say more about which suite they adopt and when.

There are definite acceptance points wherever a unified offer emerges. A larger suite solution may offer better customer data sharing – for example an identifier such as a loyalty ID that can be used across all components of the solution. They can offer higher data sharing frequencies as they ultimately vs. real time updates. Batch updates. For example, this could be a major game changer for many brands that require real-time data for dynamic customer experiences. And large solutions are likely to offer a high level of service and handholding based on the complexity of their offer and the potentially large size of their general customer.

The disadvantages of accepting a full suite offer are largely for brands with their own complex data requirements that require a high level of flexibility. Some large tech companies make for their average customer, offering off-the-shelf options with minimal customization. While other companies like Adobe and Salesforce have good resources for custom builds and services, they will of course still be built from their own suite. Brands need to decide what level of customization, independence and flexibility they need and move forward with an understanding of what they might need to find a new partner in the future if M&A changes things.

Customers who create their own stacks as point solutions and use consolidated offerings will probably get a “standard package”. This is similar to standard data integration with other point solutions, batch updates and much less hand-holding. At that point, data interoperability becomes a problem – a problem that we as an industry need to address. For example, if a brand is using LiveRamp for identification today and Salesforce’s CDP, everything goes well together today. But if Salesforce gets its own identity level, will it get the same incentive to play well with LiveRamp? It will probably create better functionality for its own suite first.

When an independent player is bought by a big tech company, it mostly adopts that big company’s product and service approach. This could mean that customization becomes impossible, or there is little support for a specific vertical, or little experience with a specific element of the business such as loyalty data or non-programmatic marketing requirements.

Brands need to know what matters most

While it is impossible to predict the final final game, it is clear that a big change is on the horizon. Brands of all sizes and levels of data maturity need to have some visual planning and a priority list of what is most important to them when it comes to identity. This will make it easier to make decisions in the event that one of the “should” partners acquires or integrates closely with a particular partner.

Of course, CIOs and CMOs should align on their priorities, but they should work together to discuss the effects of different moves – for example, estimating the cost of replacing a key component of their product, or dynamic advertising if ROI has decreased. Not possible. All of these different what-if scenarios can help prepare the entire team to make smarter decisions faster, before they engage with an approach that may or may not work in the future.

Nancy Marzouk is the CEO and founder of Mediawala.

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